Even though we tend to plan most of our activities- from vacations to daily events, we're not so inclined to plan on how we are going to spend our money. A money plan is essentially a budget. The budget specifies how much we are going to spend and save, and differentiates between our needs and our desires.
The first task to gain control of day-to-day spending is to keep a journal of all expenditures for one month. Don't change how you normally spend your money, simply keep track of where it goes for one month. After one month, evaluate your journal. Differentiate between essentials and non-essentials, perhaps with a highlighter. This is where the difference-making begins: identify non-essential expenses that you could decrease. Often, simple awareness of where your money is really going is all you need for motivation to gain back control. Hopefully, you will see and increase in cash flow by eliminating small non-essentials and creating new budgets, as needed, to obtain your overall goals. Be realistic. If a budget is too demanding or limiting, then it will be nearly impossible to live by and quickly becomes a burden. Allow little allowances of the things you enjoy. Also, view your budget as a work-in-progress, for several months so as to avoid the uncomfortable strain of a sudden lifestyle change. You want YOUR budget to work for you over the long term.
The first step to take is deciding which areas to cut and which need to stay. A few good places to trim your budget during the first few months might be:
1. After you see what your nonessential expenditures are for one month, break the month down into an average per week expenditure. Take out cash, a bit less than you spent the previous month. Use this allotment for your nonessentials for the upcoming month. If you run out before the week is up, the end is in sight, and you can make it a few days without that extra latte.
2. Review how often you dine out at restaurants each week. In the first month you may eat out, but less often. Choose the days that you eat out based on what is easiest for you. Then don't eat out more often than that.
3. Head straight for the clearance racks when you are shopping. Then check out the sales racks. Only buy things that are on sale. Periodically check out the clearance areas of your favorite stores. Accumulate your wardrobe one piece at a time, buying items at a discount instead of purchasing an entire outfit at once.
4. Spend some time comparing prices for things like utilities, such as the telephone, cable or satellite service, trash pickup; check out terms and rates available from credit card providers; and shop around for the best deals, keeping in mind that bonuses may be available to you if you're willing to switch.
5. Withdraw cash only from your bank's ATM machines to avoid extra charges.
6. Always make a list prior to going shopping, and make sure you adhere to it. If you do remember something that wasn't on the list, remind yourself that you can always return to the store. Most likely you won't return for that item, which will save you even more money in the long run. Do whatever it takes to avoid impulse purchases in order to succeed in your financial goals.
Overall, remember reduce stress by starting with a snap shot of where you are spending money now, make a budget in increments, allow yourself a few luxuries as you go, don't be too hard on yourself. You want the budget to work over the long term. Create successes for yourself in the beginning, reevaluate over a period of several months, and a new lifestyle will emerge where you will be more in control of your spending and have less wasteful spending that will generate more cash flow for you as well.
